ECB's Lagarde is speaking at the Hearing of the Committee on Economic and Monetary Affairs at the European Parliament and comments:
Euro Area Economic Outlook
The euro area economy showed resilience, growing 0.7% in the first half of the year, supported by domestic demand.
Growth was uneven: frontloading of trade boosted Q1, but higher tariffs, stronger euro, and global competition weighed on Q2 and are expected to limit growth short term.
Services sector remains strong, offering underlying momentum.
Labour market is holding up, supporting consumer spending despite softening demand.
Past ECB rate cuts and government spending on infrastructure and defence expected to support investment.
Growth forecasts: 1.2% (2025), 1.0% (2026), 1.3% (2027).
Risks to growth have become more balanced, with downside risks from trade tensions and upside potential from reforms and spending.
Inflation Outlook
Inflation close to 2% target (2.2% in September; core at 2.3%).
Real wages recovered to pre-inflation surge levels; wage growth moderating (3.9% in Q2 vs. 4.8% last year).
Projections: 2.1% (2025), 1.7% (2026), 1.9% (2027).
Inflation ex-energy/food: 2.4% (2025) → 1.8% (2027).
Risks remain from volatile global trade environment, but the range of risks has narrowed.
Monetary Policy Stance
Disinflation process is over; inflation expected to remain around 2%.
ECB kept interest rates unchanged at last meeting.
Policy remains data-dependent and meeting-by-meeting.
No pre-commitment to a rate path—decisions will be based on inflation outlook, underlying dynamics, and transmission strength
There is really not a lot of surprise in Lagarde's prepared speech.
